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Vedder Thinking | Articles SEC Division of Investment Management Director William Birdthistle Provides Remarks at ICI Investment Management Conference


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On March 20, 2023, William Birdthistle, Director of the SEC’s Division of Investment Management, delivered remarks at the ICI Investment Management Conference in Palm Desert, California. In his remarks, Mr. Birdthistle discussed three broad trends, how the Division’s recent rulemaking could address these trends and the risks the trends could pose to investors and markets. The first trend Mr. Birdthistle highlighted was technological advancement, including specific developments such as distributed ledgers and decentralized finance, artificial intelligence and machine learning. He noted the technology-related risks posed by cybersecurity threats and data breaches, prompting the recent rulemaking proposals for cybersecurity programs at investment advisers and funds and the recent proposed amendments to Regulation S-P that would require advisers to adopt policies and procedures for responding to the unauthorized access or use of customer information. He also referenced the recent proposal to amend the investment adviser custody rule (Rule 206(4)-2) that, in part, was intended to address technological advancement in the area of custody.

The second trend Mr. Birdthistle discussed was changing demographics. He noted a wave of retirements in the Baby Boomer generation, all of whose members will be at least 65 years old by 2030. As one generation leaves the work force and another joins, he emphasized the importance of providing clear disclosure about investment products and called attention to the recent adoption of streamlined annual and semi-annual shareholder reports for mutual funds and ETFs and the proposed amendments to the SEC’s names rule (Rule 35d-1). He also noted demographic change within the asset management industry. He cited the SEC’s Office of Minority and Women Inclusion, which provides entities with a “Diversity Assessment Report” tool that may be used to assess a firm’s diversity policies and practices, and referenced the staff FAQ published in 2022 regarding the consideration of diversity, equity and inclusion factors in the recommendation and selection of investment advisers.

The third trend Mr. Birdthistle observed was the rapid growth in the asset management industry in recent decades. He presented data from a 2022 ICI survey indicating that 52.3% of U.S. households own mutual funds, compared to 25% in 1990 and less than 6% in 1980. He also referenced an Investment Adviser Association study that reported a 47% increase in the number of individuals served by investment advisers between 2019 and 2021. In this regard, he noted the heavy reliance asset management firms place on third-party service providers and highlighted the recent rule proposal relating to the oversight by investment advisers of outsourced functions (Rule 206(4)-11) and related amendments to Form ADV and recordkeeping requirements.

A transcript of Mr. Birdthistle’s remarks at the 2023 ICI Investment Management Conference is available here.


John S. Marten


Nathaniel Segal


Jacob C. Tiedt